The once a quarter Reserve Bank of Australia Statement on Monetary Policy

  • Says a further rise in the AUD would slow pick up in economic growth and inflation

Quick Headlines via Reuters:

  • Reserve Bank of Australia says it has held rates steady to provide "appropriate support" to the economy
  • lowers inflation forecasts, underlying inflation not expected to reach 2 pct until early 2019
  • forecasts underlying inflation at 1.75 pct to December 2018, then 2 pct to December 2019
  • RBA forecasts CPI inflation at 2 pct to June 2018, then 2.25 pct to December 2019
  • Estimates CPI reweighting means underlying inflation overstated by 0.3 ppt
  • Entry of foreign retailers to constrain retail inflation
  • forecasts GDP growth 2.5 pct December 2017, 3.25 pct December 2018, 3.25 pct December 2019
  • forecasts unemployment rate at 5.5 pct out to June 2019, 5.25 pct by December 2019
  • revises up outlook for jobs growth, leading indicators point to solid growth over next 6 months
  • household consumption likely slowed in Q3, constrained by slow income growth and high debt
  • outlook for business investment more positive than for some time
  • strength in public investment set to continue, spilling over into private investment
  • housing market has eased nationally, Sydney has slowed noticeably
  • LNG exports to add 0.33 ppt to gdp over next two years, less than expected due to delays

AUD/USD dropped a little, marked lower on the softer inflation forecasts ... this will further weigh on expectations for any interest rate hikes. I should start an RBA hashtag ... #L4L ... lower for longer

I reckon the Reserve Bank of Australia GDP forecasts continue to be too optimistic. I hope I am wrong (apologies for the h word).

more to come

Full text: Statement on Monetary Policy- November 2017

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The Statement sets out the Bank's assessment of current economic conditions, both domestic and international, along with the outlook for Australian inflation and output growth.

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ps. You may have noticed the RBA forecasts are no linger 'ranges', 'points' instead. I poste on this earlier, ICYMI: The RBA Statement today will include a huge change to forecasting - what to expect